The 2021-2026 Scottish parliamentary term has now concluded. The next parliament will resume after the Scottish elections on 7 May and, whatever the result is, we will have a significantly new cohort of MSPs as so many of the former incumbents are not standing for re-election.
With this degree of change comes the possibility of a new approach from what will undoubtedly be a solidly pro-independence Scottish government.
There is potential for transformation
The last parliament has left a potentially transformative legacy to be picked up after 7 May. We are referring here to the Community Wealth Building (Scotland) Act (CWB Act). This is a hugely important piece of legislation, but it remains to be seen whether it will achieve its full potential or whether it will be emasculated by a timid and risk averse new Scottish government and a parliament reluctant to drive things forward.
The CWB Act is not the end of the matter
The CWB Act does not change the law in any particular area – it is an ’enabling act‘. The way in which it is implemented will depend on what is set out in the ministerial “CWB Statement”, in the guidelines issued by ministers, and in the local CWB action plans that local authorities are tasked with developing and implementing.
The act designates a number of specified ‘public bodies‘ which are to contribute to the development and implementation of ’local plans‘. Although ‘finance‘ is one of the five ’pillars‘ of CWB, the act does not include local government pension funds in the list of designated ’public bodies‘, despite the fact that the pension contributions income of these funds are all derived from the public purse. CWB requires finance to be provided to support local and regional economic development and to be recycled to support economic activity.
This is a serious omission, and it is to be hoped that it will be rectified when new ministers come to issue their required CWB statement and the guidelines. It is important to find out where candidates seeking election stand on this issue.
We have also witnessed an absence of joined up government during the last parliament. Two other major programmes have been seriously damaged by a failure to incorporate CWB thinking into the design of policy. One is the Scottish Government Bond Programme, the other the approach taken to decarbonising Scotland’s buses.
What is ’community’?
This failure of joined up government may derive from the lack of clarity about what the term ’community’ means. It is not defined in the act. There are clear signs that the Scottish government has sought to impose obligations on local authorities while absolving itself of any responsibility for national wealth building. The nation is also a community and the term also applies in the context of the international community. If the previous Scottish government intended to apply the narrowest possible interpretation of the term ’community’ then this also constitutes a critical issue for the new parliament to contest.
The bond programme
The last Scottish government chose to issue wholesale bonds to the bond market rather than to issue retail bonds to the Scottish public and offer bonds to the Scottish local government pension (LGPS) funds. Doing this would mean retaining interest payments of up to £170mn over 10 years in the Scottish economy. Issuing bonds in the bond market will result in the interest payments being made to foreign investors, thus leaking out of our own economy. This is a blatant contradiction of the principles of CWB. The new parliament must demand that the next Scottish government take a different path.
Electric bus procurement
The crisis affecting Alexander Dennis’s ( ADL) electric bus manufacturing at Falkirk is currently in the news. This is proving to be another fiasco created by ignoring the principles of CWB.
The way in which incentives to rapidly grow Scotland’s fleet of electric buses have been designed has directly impacted ADL. This has arisen because grant funding has been offered to bus operators who are then free to purchase new e-buses from wherever they choose and has led to buses being ordered from China rather than from ADL. ADL is subject (rightly) to fair work policies, which are an element of CWB, but this undermines their price competitiveness compared with Chinese manufacturers who benefit from lower wages and employment standards.
Applying the principles of CWB should include both fair work and procurement from manufacturers based in Scotland, to support employment here and to ensure that financial flows are retained and recycled in our own economy.
A dogmatic belief that market competition is a preferable choice compared to direct state intervention means that the principles of CWB have been ignored whilst the Scottish government has been busy legislating in favour of community wealth building. A starker failure of joined up government is hard to imagine.
So, this is where we are as we wait in hope for better things from our new parliament and Scottish government. It is up to our new MSPs to make sure it happens.
It’s now up to our new parliament to act
So, candidates, will you stand and be counted and make sure that the principles of community wellbeing are fully embraced by the new Scottish government? You can find out more about these issues by downloading two reports from the Scottish Currency Group website; “Scottish Government Bonds and Investing in Ourselves”, “The Community Wealth Building Act 2026 and the Fiduciary Duty of Scotland’s Local Government Pension Funds”.
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